Loudoun uses education reserves to help fill shortfall: Move irks School Board, which had been saving money for lean years

Loudoun supervisors chief Scott York:
Loudoun supervisors chief Scott York: "This is taxpayer money." (Courtesy Of Scott-k. York)
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By Michael Alison Chandler and Derek Kravitz
Washington Post Staff Writer
Wednesday, October 21, 2009

Loudoun County budget officers dipped into public school reserves to help fill a $28 million revenue shortfall this week, surprising the School Board, which was saving money for the lean years expected ahead.

The county's chief financial officer, Mark D. Adams, said the transfer amounted to a "rebalancing of accounts" after an audit of the fiscal year that ended June 30, which showed that some funds were low and others high. Adams said the accounting change would not affect services or operations for the county or the schools this year.

Unfortunately for the school system, most of the low funds were on the county side. The county had expected to end the year with a balance of $39 million, but depressed real estate revenue led to a balance of $11 million. The school system was in better shape and ended the year with a surplus of $36 million.

The School Board had hoped to save the surplus for next year. Early estimates put the schools' shortfall for next fiscal year at $70 million.

The county decision prompted the School Board to schedule a special meeting Monday to talk to its attorneys and grapple with the effect of the funding transfer. Vice Chairman J. Warren Geurin (Sterling) said the board is "not pleased" with the changes when "Loudoun County's checkbook does not balance."

The School Board approved a resolution to send to the county supervisors, requesting that the funds be restored when they approve next year's budget. The document struck a miffed tone, alleging that the shortage was "caused by the faulty revenue assumptions used last spring by County staff and the Board of Supervisors." It said that the School Board "has faithfully worked to not only stay within its budget but to achieve efficiencies and savings in order to apply such savings toward the FY 2011 school operating budget."

Loudoun County budget officers and some supervisors responded Tuesday that the extra money does not belong to the schools. "This is not our money. This is not the schools' money. This is taxpayer money, plain and simple," Loudoun County Board of Supervisors Chairman Scott K. York (I) said at a supervisors meeting.

Maintaining a balanced budget and healthy reserves is crucial to qualifying for a AAA bond rating, which helps the county borrow money at better interest rates. County funds made up nearly 70 percent of the Loudoun school system's $730 million budget this fiscal year.

But school officials said they were concerned about the effect it will have on their budget for next year, when they are grappling with more than 3,000 new students and rising health-care costs.

The county is bracing for steep cuts to all its services next fiscal year. The budget for schools and other services is $1.4 billion. If no increase in the tax rate is approved, county officials are projecting a $157 million shortfall.

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